The Mobile Downturn (continued)

I wrote this “mobile downturn” post 18 months ago. It rings more true today than when I wrote it.

Some friends emailed me about investing in a mobile consumer startup last week and my reply to them included this line:

doing anything in the consumer mobile space these days is super hard. i can’t think of many consumer facing mobile apps that have gained massive traction and sustained it in the past three years. can you?
I saw this post this morning in my news feed. It goes over all the reasons why it is so hard to break out in mobile. We’ve been through all of these reasons ad nauseam here for years and years. This is not a new thing. But this chart from that post certainly sums up the challenge:
power law curve

So if you want to launch a new consumer mobile app, what do you do? The best answer I have heard to that question came at breakfast yesterday with an entrepreneur. He said he plans to build mobile web experiences that can go viral and build adoption of his product and use that as a funnel to drive adoption, over time, to his native apps. I’ve seen that work.

But even so, it’s not an easy time to build consumer facing mobile companies. It is not an easy time to invest in them either.

In our first fund that we invested from 2004 to 2007, 57% of our investments were in broad horizontal consumer facing companies. This was pre-mobile so many did not have a mobile app when we invested. But all of them that are still around are predominantly mobile companies today. That percentage declined to 45% in the fund we invested from 2008 to 2011, and further declined to 30% in the fund we invested from 2012 to 2014. In the fund we are investing now, which is about 75% invested, that percentage stands at 35%, a bit of an uptick, largely because we’ve gone a bit later in our consumer facing strategy and have largely limited our investments in consumer facing businesses to ones that have strong product market fit.

The funny thing about all of this is that I don’t see any shortage of entrepreneurs walking into our offices with plans to build and launch consumer facing mobile apps. While the odds are increasingly against them, hope springs eternal it seems.